An invitation to participate in the CNBC TV show “Global Players” brought me to Paris. They planned to record the show in connection to the 7th International Oil Summit, www.globalplayers.tv/

A major topic for the oil summit was much discussion about needed collaboration between National Oil Companies (NOCs), and International Oil Companies (IOCs). More then 75 % of remaining oil reserves are in the hands of NOCs and IOCs are producing at maximum capacity using all available technology. Hence it is easy for anyone to understand why IOCs are eager to convince the NOCs that they need new partners in the future. Chevron is the perfect company to use as an illustration of the problem. According to their experts they are using advanced technology but production is declining. Chevron is facing Peak Oil and Peak Oil is reality, but none of the seminars at the summit addressed this problem.

Claude Mandil, Executive Director of the International Energy Agency (IEA) was first on stage. He saw no peak in the demand before 2030. Different scenarios yielded demands from 111 to 123 million barrels per day (mbpd) in year 2030. He showed a figure with demand increases for the years 2004 to 2010. The conclusion was that the demand growth was 1.5 mbpd per year over the next 5 years. The oil industry has for several years claimed that the production from existing fields is declining at around 5 % per year or a decrease in production of about 4 mbpd each year. Adding the increase in demand and the decline we get that an extra 27 mbpd is needed in new capacity in the next 5 years. Projects adding the 7.5 mbpd were discussed but the decline in existing fields was not mentioned. A question to Claude Mandil about this decline got the answer that fields have always been declining and so far this has not been any problem.

Mohammed Barkindo, Acting Secretary-General of OPEC, discussed the increasing demand as the oil producing countries see it. For them it is important to have security in demand. If different scenarios showed that there is an uncertainty of 12 mpbd, one should not expect that OPEC will make investments that bring the production into the uncertainty region without the security of high oil prices.

In the next section three ministers from oil producing countries got the opportunity to address the future of oil policies in context of high oil prices. His Excellency, Edmund Daukoru, President of OPEC and Minister of State for Petroleum Resources in Nigeria, claimed that he saw no problems when it comes to resources. OPEC has a spare capacity of 2 mbpd. The problems can be found on the down stream sector. Refineries are not prepared to take the oil that is available today. They need to make investments to handle sour oil.

Security of demand was the key issue for His Excellency Abdulla Bin Hamad Al-Attiyah, Second Deputy-Premier and Minister for Energy and Industry of Qatar. But first he proudly told us that Qatar last year had the highest increase in GDP in the world, and the increase this year was also very high. Qatar is just now investing heavily, but the problem is that price of materials like steel and cement have increased threefold or more. If these investments to increase production are to continue they need firm security of demand. He also pointed out that OPEC did not set the price of oil. Traders around the world set the price for OPEC.

The third minister to address the summit was His Excellency Mohamed bin Dhaen Al Hamili, Energy Minister of the United Arab Emirates. He discussed reserves and pointed out the fact that the reserves outside the Middle East will only last for 22 years at today's production rate while the reserves in the Middle East will last for 88 years and this shows that the production in the Middle East will be even more important in the future. This is exactly what Dick Cheney said in 2001 in the US energy policy document: “In year 2020 around 54 to 67 percent of the world production of oil needs to come from the Middle East.”

In the discussion Claude Mandil had trouble understanding that OPEC needed the guarantee of security of demand, as it was so obvious that demand was increasing. The call on OPEC is enormous. In the IEA 2004 World Energy Outlook the base scenario has an increase for OPEC from 28.2 mbpd in 2003 to 64.8 mbpd in 2030 and 33 mbpd of this increase is to come from the Middle East. Producers in the Middle East must double their oil production. This is not possible, but it looks like the producers are unable to bring themselves to say that. The request for a guarantee of Security of Demand, that never will be given, might be another way to say that it is not possible to double the production. I think it is time for OPEC to start to discuss sustainable production. In this discussion one has to include two components. (1) The fact that you can not over-produce an oil field without damaging the total production from the field and (2) that the countries in the Middle East are heavily dependent on revenues from the oil industry. When these revenues start to decline the whole region might start to decline. The Middle East is now helping us with energy, who will help the Middle East then?

In the session about Access to Oil & Gas, the oil industry got the opportunity to tell their part of the story. Norsk Hydro, Shell, Total and Chevron all presented great commercials for IOCs. A summary is that they all think that NOCs need help in the future. It is easy to understand that they want to have this collaboration as reserves for the IOCs are declining much faster then for NOCs. A question from me about the steep decline in the North Sea and the fact that production for Chevron is declining even though they are using all available technology got the following answers.

Tore Torvund from Norsk Hydro explained that technology had doubled the total output but they now were very surprised to see the very high decline rates. In 2005 the production in Norway declined by 10 percent. The Chevron chief economist Edgard Habib explained the decline with the fact that it was a mature industry.

When Peak Oil was brought up it was interesting that Malcolm Brinded, executive Director of Exploration and Production for Shell, accepted that easy oil now is peaking, but saw no problems in increasing production steadily to 2020. Production from deep water, Arctic oil, heavy oil, oil sand and oil shales should be sufficient. On the other side we have Christophe de Margerie (head of exploration for Total) who claims it is time to find out what the maximum production capacity might be and when it will occur. ASPO, the Association for the Study of Peak Oil & Gas, has long been tackling these questions seriously.

Questions from the delegates from China indicated that they were worried over the price of oil. In a private discussion with Claude Mandil he told me that the world can never reach a production of 115 mbpd. This is the IEA 2005 basic scenario figure down from 123 mbpd in 2004. We might soon see scenario estimates of 100 mbpd from IEA instead of 115. We will soon be facing the fact that an increasing import demand from China must result in a decline of the imports in other parts of the world.